Hard-to-value assets among top AIFMD reporting worries
23 December 2014 London
Image: Shutterstock
Kinetic Partners has outlined the three top challenges faced by firms under the alternative investment fund manager’s directive (AIFMD) Annex IV reporting requirements.
The financial services advisory firm outlined the main concerns for companies, as well as advising steps to manage these challenges.
Under AIFMD, companies are obliged to report information to the authorities of their respective jurisdictions.
The main concerns are: Frequency and scope of reporting; hard-to-value instruments such as asset-back securities and real estate; and complications when it comes to look-though on investments.
For timings and required information, Kinetic Partners advises companies to study the flowcharts and reporting timelines supplied by the European Securities and Markets Authorities (ESMA), while, with regards to hard-to-value assets, it advised fund managers to report estimated figures until they can clarify specific values.
It also clarified that on master-feeder structures, no look-through to the master is required when completing a report on the feeder. For funds-on-funds reporting, there is no look-through requirement to the holdings in the funds. Also, there is no requirement to provide a look-through for underlying investments through special-purpose vehicles.
Andrew Shrimpton, global head of regulatory compliance at Kinetic Partners, said: “The overall aim of AIFMD Annex IV reporting is to provide greater transparency in relation to alternative investment funds and to protect and enhance the integrity of the financial system.”
“Reporting obligations for fund managers will vary depending on whether the fund is managed or marketed in the European Economic Area or not. Managers therefore need to establish their reporting obligations and determine when their first report is due, the frequency with which they should report, which funds they should be reporting on and the sections of the report which they should complete.”
“Annex IV reporting requires granular information, and managers therefore need to determine the sources and availability of such information. Regulatory reporting is an integral part of the Financial Conduct Authority’s supervision strategy and transparency of information is a key part of this.”
The financial services advisory firm outlined the main concerns for companies, as well as advising steps to manage these challenges.
Under AIFMD, companies are obliged to report information to the authorities of their respective jurisdictions.
The main concerns are: Frequency and scope of reporting; hard-to-value instruments such as asset-back securities and real estate; and complications when it comes to look-though on investments.
For timings and required information, Kinetic Partners advises companies to study the flowcharts and reporting timelines supplied by the European Securities and Markets Authorities (ESMA), while, with regards to hard-to-value assets, it advised fund managers to report estimated figures until they can clarify specific values.
It also clarified that on master-feeder structures, no look-through to the master is required when completing a report on the feeder. For funds-on-funds reporting, there is no look-through requirement to the holdings in the funds. Also, there is no requirement to provide a look-through for underlying investments through special-purpose vehicles.
Andrew Shrimpton, global head of regulatory compliance at Kinetic Partners, said: “The overall aim of AIFMD Annex IV reporting is to provide greater transparency in relation to alternative investment funds and to protect and enhance the integrity of the financial system.”
“Reporting obligations for fund managers will vary depending on whether the fund is managed or marketed in the European Economic Area or not. Managers therefore need to establish their reporting obligations and determine when their first report is due, the frequency with which they should report, which funds they should be reporting on and the sections of the report which they should complete.”
“Annex IV reporting requires granular information, and managers therefore need to determine the sources and availability of such information. Regulatory reporting is an integral part of the Financial Conduct Authority’s supervision strategy and transparency of information is a key part of this.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
.jpg)